I’ve taken some of the profits from my S&P 500 tracker, and I’m looking to plough the gains into the FTSE 100. I haven’t abandoned the US, but I think the market looks a little overvalued right now. Also, I prefer to buy individual stocks rather than passive funds.
The money is now sitting in my Self-Invested Personal Pension (SIPP) waiting to be invested when I find the right moment and the right stocks.
There’s a lot of talk about a stock market crash today, but that won’t stop me. Someone, somewhere is always warning of a crash. If I’d listened to them, I’d have missed out on the long bull market of the last 16 years.
Targeting great value shares
I’ve already started feeding money into two FTSE 100 stocks, taking advantage of recent drops. Both are solid, profitable businesses with a great track record of delivering dividends and growth, but have had a bumpy year or two.
The first is business equipment specialist Bunzl, which has hiked dividends for more than three decades. Lately, it’s been hit by US tariffs and the shares are down 30% in the last year. It looks good value though, with a price-to-earnings ratio of 12.7 while yielding just over 3%. I’ve bought Bunzl twice. Now I’m ready to swoop a third time.
It’s a similar story with another FTSE 100 star, data provider London Stock Exchange Group (LSE:LSEG). After years of turbo-charged growth, its shares are down 15% in 12 months. They aren’t cheap, with a PE of 23.6, but are a lot cheaper than they were.
First-half adjusted earnings per share climbed 20.1% to 208.9p while the board also announced a £1bn share buyback. That hasn’t helped the share price yet but, given time, I think that will change.
London Stock Exchange Group is a favourite
London Stock Exchange Group could benefit from an increase in market volatility, which could drive more trading, and boasts a “resilient” subscription business too. The trailing yield’s just 1.5%, and the dividend policy’s progressive with the interim dividend up 14.6% to 47p per share.
This will be my number-one buy in a wider market sell-off. Yet it’s not without risks. Subscriptions could dwindle if we see job cuts in the City or artificial intelligence (AI) provides an alternative way of generating its data. A brutal crash would hurt.
I’m also tempted to top up my stake in dividend superstar M&G, which has a trailing yield of 8% and a forward P/E of just 10.4. The share price is up 25% over one year and 60% over five, so investors are enjoying capital growth too.
I’m also considering upping my defence exposure, by purchasing Babcock International Group. I’m a little wary, given that its shares have rocketed 165% in the last year, but it has momentum on its side. I’m also keen on data provider RELX, whose shares are down 3% over the last year after a blistering run. Could prove a good entry point.
After feeding in my money I’ll aim to hold all five for years if not decades, to give them time to compound and prove their long-term worth. That’s the real way to build wealth.
